The document discusses process development, which involves planning and designing production processes based on inputs like product information, production systems, and operations strategies. Key factors that affect process development include the nature of product demand, degree of vertical integration, production flexibility, degree of automation, and product quality needs. The document outlines different types of process designs like product-focused, process-focused, and group technology approaches. It also discusses considerations around process reengineering.

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Process DevelopmentProcess Development

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Inputs:Inputs:
• Product/Service InformationProduct/Service Information
• Production System InformationProduction System Information
• Operations StrategyOperations Strategy
Process Planning & Design:Process Planning & Design:
• Process-Type SelectionProcess-Type Selection
• Vertical Integration StudiesVertical Integration Studies
• Process/Product StudiesProcess/Product Studies
• Equipment StudiesEquipment Studies
• Production Procedures StudiesProduction Procedures Studies
• Facilities StudiesFacilities Studies
Outputs:Outputs:
• Process TechnologyProcess Technology
• FacilitiesFacilities
• Personnel EstimatesPersonnel Estimates
•Process plansProcess plans
Process Development SystemProcess Development System

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Major Factors Affecting Process DevelopmentMajor Factors Affecting Process Development
I.I. Nature of product/service demandNature of product/service demand
II.II. Degree of vertical integrationDegree of vertical integration
III.III. Production flexibilityProduction flexibility
IV.IV. Degree of automationDegree of automation
V.V. Product/Service qualityProduct/Service quality

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Nature of Product DemandNature of Product Demand
DemandDemand
fluctuates over time andfluctuates over time and
is affected by product price, so pricingis affected by product price, so pricing
decisions and the choice of processes must bedecisions and the choice of processes must be
synchronized.synchronized.
Therefore,Therefore,
Production processes must have adequateProduction processes must have adequate
capacity to produce the volume of the productscapacity to produce the volume of the products
that customers need.that customers need.
Provisions must be made for expanding orProvisions must be made for expanding or
contracting capacity to keep pace with demandcontracting capacity to keep pace with demand
patterns.patterns.
Some types of processes are more easilySome types of processes are more easily
expanded and contracted than others.expanded and contracted than others.

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Degree of Vertical IntegrationDegree of Vertical Integration
Vertical integrationVertical integration is the amount of theis the amount of the
production and distribution chain that is broughtproduction and distribution chain that is brought
under the ownership of a company.under the ownership of a company.
This determines how many production processesThis determines how many production processes
need to be planned and designed.need to be planned and designed.
Decision of integration is based on cost,Decision of integration is based on cost,
availability of capital, quality, technologicalavailability of capital, quality, technological
capability, and more.capability, and more.
Strategic outsourcingStrategic outsourcing (lower degree of(lower degree of
integration) is the outsourcing of processes inintegration) is the outsourcing of processes in
order to react quicker to changes in customerorder to react quicker to changes in customer
needs, competitor actions, and technology.needs, competitor actions, and technology.

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Production FlexibilityProduction Flexibility
Product flexibilityProduct flexibility -- ability of the production-- ability of the production
(or delivery) system to quickly change from(or delivery) system to quickly change from
producing (delivering) one product (or service)producing (delivering) one product (or service)
to another.to another.
Volume flexibilityVolume flexibility -- ability to quickly increase-- ability to quickly increase
or reduce the volume of product( or service)or reduce the volume of product( or service)
produced (or delivered).produced (or delivered).

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Degree of AutomationDegree of Automation
Advantages of automationAdvantages of automation
Improves product qualityImproves product quality
Improves product flexibilityImproves product flexibility
Reduces labor and related costsReduces labor and related costs
Disadvantages of automationDisadvantages of automation
Equipment can be very expensiveEquipment can be very expensive
Integration into existing operations can beIntegration into existing operations can be
difficultdifficult

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Product/Service QualityProduct/Service Quality
Old viewpointOld viewpoint
High-quality products must be made in smallHigh-quality products must be made in small
quantities by expert craftsmenquantities by expert craftsmen
New viewpointNew viewpoint
High-quality products can be mass-produced usingHigh-quality products can be mass-produced using
automated machineryautomated machinery
Automated machinery can produce products ofAutomated machinery can produce products of
incredible uniformityincredible uniformity
The choice of design of production processes isThe choice of design of production processes is
affected by the need for superior quality.affected by the need for superior quality.

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Types of Process DesignsTypes of Process Designs
Product-FocusedProduct-Focused
Process-FocusedProcess-Focused
Group Technology/Cellular ManufacturingGroup Technology/Cellular Manufacturing

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Product-FocusedProduct-Focused
Processes (conversions) are arranged based onProcesses (conversions) are arranged based on
the sequence of operations required to produce athe sequence of operations required to produce a
product or provide a serviceproduct or provide a service
Also called “production line,” “assembly line,”Also called “production line,” “assembly line,”
and flow lineand flow line
Two general formsTwo general forms
Discrete unit – automobiles, dishwashersDiscrete unit – automobiles, dishwashers
Process (Continuous) – petrochemicals, paperProcess (Continuous) – petrochemicals, paper

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Process-FocusedProcess-Focused
Processes (conversions) are arranged based onProcesses (conversions) are arranged based on
the type of process, i.e., similar processes arethe type of process, i.e., similar processes are
grouped togethergrouped together
Products/services (jobs) move from departmentProducts/services (jobs) move from department
(process group) to department based on that(process group) to department based on that
particular job’s processing requirementsparticular job’s processing requirements
Also called “job shop” or “intermittentAlso called “job shop” or “intermittent
production”production”
ExamplesExamples
Machine shopMachine shop
Auto body repairAuto body repair
Custom woodworking shopCustom woodworking shop

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Group Technology/Cellular ManufacturingGroup Technology/Cellular Manufacturing
Group TechnologyGroup Technology
Each part produced receives a multi-digit codeEach part produced receives a multi-digit code
that describes the physical characteristics of thethat describes the physical characteristics of the
part.part.
Parts with similar characteristics are groupedParts with similar characteristics are grouped
into part familiesinto part families
Parts in a part family are typically made on theParts in a part family are typically made on the
same machines with similar toolingsame machines with similar tooling

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Product/Process Design & Inventory PolicyProduct/Process Design & Inventory Policy
Standard Products and Produce to StockStandard Products and Produce to Stock
Sales forecasts drive production scheduleSales forecasts drive production schedule
Maintain pre-determined finished-goods levelsMaintain pre-determined finished-goods levels
MRP forecast drives material orderingMRP forecast drives material ordering
Custom Products and Produce to OrderCustom Products and Produce to Order
Orders set production schedule and driveOrders set production schedule and drive
material deliveriesmaterial deliveries
Design time (pre-production planning) may beDesign time (pre-production planning) may be
required before production can be scheduledrequired before production can be scheduled

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Process ReengineeringProcess Reengineering
The concept of drastically changing an existingThe concept of drastically changing an existing
process designprocess design
Not merely making marginal improvements toNot merely making marginal improvements to
the processthe process
A correctly reengineered process should beA correctly reengineered process should be
more efficientmore efficient
A smaller labor force is often the resultA smaller labor force is often the result

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